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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

RICHARD B. FEINBERG :

Plaintiff, :

vs. : Civil Action

:

I. ISABELLE BENTON : Docket No. 05-CV-4847

and :

BENTON PARTNERS II LLP :

Defendants. :

PLAINTIFF’S PRE-TRIAL MEMORANDUM

(a) Plaintiff’s Summary of the Nature of the Case.

Plaintiff Richard Feinberg (“Feinberg”) alleged that

defendant Benton Partners II, LLP, (“BPII”), a legal entity under

the control of defendant I. Isabelle Benton (“Benton”), used

“inside information” when BPII purchased 100 shares of Class A

PHLX stock from Feinberg in a transaction that was concluded on

December 1, 2004. The “inside information” possessed by Benton

was derived from her position as a member of the PHLX Board of

Governors, which position Benton had held since on, or about,

March 2003 and her service on the Demutualization Advisory Group

and the Executive Committee. The “inside information” possessed

by Benton gave her the knowledge that Class A PHLX stock was much

more valuable than the price at which it was then trading as well

as the knowledge that value was to be realized in the near term.

When BPII proceeded to purchase PHLX stock by posting

indications of interest to purchase such with shareholders

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services in the second half of November 2004, Benton was aware of

her obligation as a PHLX Board member to comply with the PHLX

Code of Conduct that governed PHLX stock transactions but did not

do so. Instead, Benton proceeded to write her own letter stating

therein that Benton believed she did not possess any “inside

information,” which she then carried with her until a time when

Benton decided to submit it to the PHLX. Benton also advised

certain persons that buying PHLX stock at that time, i.e.,

November 2004, would be a “good buy.” Benton never disclosed to

Feinberg the inside information Benton possessed before BPII

concluded the purchase from Feinberg.

In sum, there were two violations under the Exchange Act

committed: 1) the violation of the rule against an insider

trading without disclosing “inside information”, a violation of

Section 10(b) and Rule 10b-5 thereunder; and 2) the violation of

the PHLX requirements under its Code of Conduct as to a Board

member engaging in a transaction in PHLX stock, which rule was

promulgated pursuant to authority delegated to the PHLX by the

SEC as a self-regulatory organization.

(b) Plaintiff’s List of all Witnesses in the Plaintiff’s case in

chief.

1. I. Isabelle Benton – Ms. Benton is expected to testify,

as an adverse witness, about:

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her educational and work background, the PHLX and its operations,

practices and business, BPII and its activities at the PHLX,

BPII’s purchase of plaintiff’s 100 PHLX shares for $20,000 on

November 30, 2004 that was concluded on December 1, 2004 as well

as its other purchases of PHLX stock and the information she

possessed as a member of the PHLX Board and her service on

various committees and groups for PHLX.

2. Richard Feinberg – Plaintiff Feinberg is expected to

testify about his financial and work background, the PHLX, his

knowledge and dealings with the PHLX, his purchases and sales of

PHLX stock, his understanding of the possibilities for the PHLX

based upon the information Plaintiff had available at the time of

the sale, his allegations, and other matters pertaining to the

pleadings and discovery. See complaint, plaintiff’s discovery

responses, and deposition of Mr. Feinberg.

3. Meyer Frucher – Mr. Frucher is expected to testify, as an

adverse witness, about his educational and work background, the

PHLX and its operations, practices, business and finances, why

KBW was retained to provide financial advisory services for the

PHLX, what services they provided, and how that connected with

decision to demutualize the PHLX, the opportunities the PHLX had

at the time of demutualization and the understanding he reached

with Jeffrey Yass, the head of Susquehanna, that led to bringing

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various firms to sell control of the PHLX.

4. Robert Kreszswick – Mr. Kreszswick is expected to

testify, as an adverse witness, about his educational and work

background, the PHLX, its practices and procedures, Mr.

Feinberg’s sale of 100 shares of PHLX stock to BPII, other trades

in PHLX stock, and other matters pertaining to the pleadings and

discovery. AND, MOST IMPORTANTLY, other bids for PHLX stock in

November and December 2004. See deposition of Mr. Kreszswick.

5. Robert Gerard – Mr. Gerard is expected to testify, as

an adverse witness, about his educational and work background,

his dealings with the PHLX, PHLX’s dealings with Archipelago,

that Archipelago was not in material merger negotiations with the

PHLX in November 2004, and other matters pertaining to the

pleadings and discovery.

6. Gregory Gentile - will testify to his dealings and

communications with Benton at the time of the purchase from

Plaintiff. See deposition of Mr. Gentile.

7. Stephen Cheseldine - will testify about his educational

and work background, and, in particular, the PHLX options floor

and his understanding of the indicators as to the future of the

PHLX based upon the business climate of the PHLX options floor,

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which was, at all times relevant hereto, the primary source of

revenue for the PHLX and also holds its greatest value. Mr.

Cheseldine will also testify to the value of PHLX technology on

the options floor.

7. Andrew Snyder - will testify about his educational and

work background, and, in particular, the PHLX equity floor and

his understanding of the indicators as to the future of the PHLX

based upon the business climate of the PHLX equity floor, which

was, at all times relevant hereto, supposedly the cause of

revenue loss for the PHLX and was ultimately shut down.

7. Arthur Aubrey - will testify about his educational and

work background, and, in particular, the PHLX equity floor and

the circumstances under which Ms. Benton associated with his

firm.

8. Lawrence Gage - will testify about his educational and

work background, and his service on the PHLX Board of Governors

including, in particular, the Board meetings at which Messrs.

Frucher and Briggs discussed the value of the PHLX based upon the

KBW valuations.

9. William Briggs - will testify, as an adverse witness,

about his educational and work background, and, in particular,

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his work as a financial advisor or officer of the PHLX and his

role in the various deals that the PHLX has negotiated.

10. Murray Ross - will testify, as an adverse witness,

about his educational and work background, and, in particular,

his work as Secretary of the PHLX and the PHLX Code of Conduct.

Plaintiff reserves the right to call these and other witnesses in

rebuttal.

(C) List of Plaintiff’s Exhibits: In addition to the right to

use any or all exhibits listed by the defendants:

Exhibit # 1: Phila Stock Exchange Special Committee Strategic

Alliances 4/18/05 7 pages - re extensive negotiations began on

Arca late November 2004

Exhibit# 2: Memorandum # 1719-04; August 31, 2004; SUBJECT:

SOLICITATION OF EQUITY ISSUES CURRENTLY BEING TRADED BY BENTON

PARTNERS II, L.P.

Exhibit # 3: Memorandum # 1858-04; September 28, 2004; SUBJECT:

SOLICITATION OF EQUITY ISSUES CURRENTLY BEING TRADED BY BENTON

PARTNERS II, L.P.

Exhibit # 4: OCTOBER 5, 2004 Bulletin - TERMINATING PERMIT

HOLDERS Effective on or after October 12, 2004 Benton Partners

II, L.P. I. Isabelle Benton 

Exhibit # 5: OCTOBER 12, 2004 Bulletin - TERMINATED PERMIT

HOLDERS Effective October 12, 2004 Benton Partners II, L.P. I.

Isabelle Benton 

Exhibit # 6: Phlx Memo No. 0809-05; April 26, 2005; The Board

of Governors deliberated regarding a report from the Special

Committee on Strategic Alliances; awarded stock & renewed

contracts

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Exhibit # 7: Phlx Memo No. 0891-04; April 26, 2004; RE: Board

of Governors Meeting of April 21, 2004; Committee listings;

revised Code of Conduct; Phila XL already operating

Exhibit # 8: Phlx Memo No. 1562-05; August 03, 2005; Executive

Committee Meeting; Special Committee on Phlx Share Transactions

Exhibit # 9: Phlx Memo No. 1616; August 16, 2005; letter

informing PHLX members and seat owners of deals with 6 firms

giving 89.4% interest in the PHLX

Exhibit # 10: Phlx Memo No. 1833-04; September 23, 2004; RE:

Board of Governors Meeting of September 22, 2004; Authorized and

approved the delegation of authority to the Executive Committee

to enter into and execute definitive agreements respecting

certain possible strategic initiatives, as well as authority to

file amended rules respecting the same with the Securities and

Exchange Commission

Exhibit # 11: Phlx Memo No. 1889-03; December 11, 2003; RE:

Board of Governors Meeting of December 10, 2003; Post

demutualization matters including ending loans that are really

additional compensation

Exhibit # 12: Deals with Merrill Lynch and Citadel announced

June 16, 2005

Exhibit # 13: Phlx News Release; January 21, 2004; Trumpeting

Demutualization

Exhibit # 14: KBW Advisory letter for Demutualization

Informational Memorandum dated October 1, 2003;

Exhibit # 15: Interactive Brokers letter bid to buy equity

interest in the PHLX

Exhibit # 16: Phlx Memo No. 0779-05; April 21, 2005; RE: Board

of Governors Meeting of April 20, 2005 rejecting Archipelago deal

Exhibit # 17: Strategic Alliance Committee meeting & resolution

May 3, 2005 to proceed on deals with Citadel and Merrill Lynch

and to prepare a stock buy back plan for the PHLX

Exhibit # 18: Strategic Alliance Committee approved deals with

Citadel and Merrill Lynch June 14, 2005 after considering

valuations prepared by KBW

Exhibit # 19: Strategic Alliance Committee approved 2nd round of

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strategic investments after considering valuations prepared by

KBW

Exhibit # 20: Buy Back plan presented August 5, 2005 in

connection with 2nd round of strategic investments after

considering valuations prepared by KBW

Exhibit # 21: Valuations prepared by KBW for 2nd round of

strategic investments August 5, 2005

Exhibit # 22: PHLX Demutualization Informational Memorandum

dated Oct 22, 2003

Exhibit # 23: Deposition of Frucher taken in PennMont v Wallace,

et al [This is subject to a confidentiality order & referred to

in section dealing with legal issues]

Plaintiff reserves the right to use exhibits not on this list in

cross and rebuttal.

(d) Plaintiff’s itemized statement of damages or other relief

sought.

Plaintiff seeks to have the transaction rescinded or, if

such cannot be done, then rescissory damages which should be

calculated as the value of the stock if it were in Plaintiff’s

possession as of the date of judgment with Plaintiff having an

entitlement to participate in whatever award is given to Class A

PHLX shareholders from the Ginsburg case that was filed in the

Delaware Chancery Court.

(e) A statement of any anticipated legal issues on which the

court will be required to rule, together with counsel’s single

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best authority (case citation, Rule of Civil Procedure, Rule of

Evidence, statute, etc.)

Judicial estoppel - State of New Hampshire V. State of Maine, 532

U.S. 742 (2001) as applied to the representations made by

Benton’s other attorneys in various cases concerning, among other

things, which matters are related.

Confidentiality - a deposition was taken of Meyer Frucher in

PennMont v Wallace, et al., plaintiff claims the right to make

use of that deposition in the event Mr. Frucher is unable to be

brought before this Court.

Relevance issues: see above as to issues concerning relatedness

and relevance of the various transactions in which the PHLX

engaged as to the matter at hand. This is an evidentiary issue.

(e) Stipulations and Admissions to Be Read into Evidence

None, as this will not be a jury trial

Dated: March 2, 2008

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CERTIFICATE OF SERVICE

I hereby certify that on this 2nd day of March, 2008 I

served the PLAINTIFF’S PRE-TRIAL MEMORANDUM without the exhibits

thereto upon counsel for defendants and all other interested

persons by way of ECF and such documents are available for

viewing and downloading from the ECF system. I also directed a

separate e-mail to counsel for defendants with the exhibits

attached thereto excepting the PHLX Demutualization Informational

Memorandum.

Respectfully submitted,

/s/

Steven B. Mirow

249 South 12th Street

Philadelphia, PA 19107

Tel. 215 923 1301

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